A primer on disability insurance

Health insurance is vitally important for managing conditions, preventing future disease and handling acute health emergencies requiring treatment. In fact, it is so important that President Obama's administration insisted on passing a national law - the Patient Protection and Affordable Care Act - that mandates coverage for every American starting in 2014. Obviously, when facing a serious injury, illness or condition, health insurance is invaluable and will likely cover the bulk of treatment costs.

Filling in the gaps

As helpful as health insurance is, though, it has limitations. Most importantly, it can't take the place of wages or commissions lost when people are too sick or injured to work. That is where another type of coverage, disability insurance, can be crucial.

Disability insurance is designed to help compensate policyholders who are temporarily or permanently disabled by paying them all or part of their pre-disability wages. Disability insurance can be purchased by individuals, and is sometimes provided by employers as part of the company's benefits package.

When disability insurance coverage works as designed, it is a critical safety net, providing financial stability and peace of mind during a difficult time. Unfortunately, due to disreputable insurers and bad faith tactics, collecting disability insurance can be quite difficult. Countless claims are denied each year, and the appeals process can be lengthy and tedious for someone in good health; it can be nearly unbearable for someone struggling with the pain and challenges of a serious illness or disability.

The ramifications of denied claims

Disability insurers often deny claims because of technicalities like incorrectly answering policy questions (even if it was an honest mistake that in no way represented fraud or deceit on the part of the policyholder) or when a treatment provider fails to complete forms on short notice. These tactics are often unfair, but the practice might still be legal, depending on the insurance laws of a particular state and the exact language of the policy itself. On the other hand, it might reflect the bad faith of an insurer who is more concerned about their company's bottom line than the well-being of policyholders.

Regardless of why the claim was denied, though, a denial can be the precipitating factor that leads to financial ruin of a disabled policyholder. Yes, health insurance coverage will take care of many medical expenses, but it doesn't help pay the mortgage, car payment or utilities, nor does it help buy groceries, gas and other essentials. Trying to scrimp by on savings may work for a while, but without regular income, it can lead to foreclosure, repossession, garnishments, collection actions or even homelessness.

Has your disability insurance claim been denied? Has your employer fired you because you are unable to work? Do you need help with a denied claim, or with filing a new claim? If so, seek the advice of an experienced insurance attorney in your area to learn more about your legal rights and options.

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